The US and China have finally reached an agreement to pause the ongoing tariff war.
From today, these two countries have reduced their levies to 10%, which is an encouraging 24% decrease from the previous levels.
According to CoinMarketCap, Bitcoin is currently just 5.25% away from reaching its all-time high of over $109,800.
Investors are once again jumping on the space's undervalued altcoins and tech stocks, now that their concerns about the trade war have been put to rest.
The crypto market has entered a new wave of optimism over the last week, with the US and China finally reaching an agreement to pause the ongoing tariff war.
Investors are now becoming confident that the easing of these trade tensions between the world’s two largest economies will be fuel for a general market recovery.
Bitcoin is already trading near its all-time high and could be the first to break through to new levels, with the altcoins trailing close behind.
12 May saw the White House confirm that the U.S. and China have agreed to a 90-day reduction in tariffs.
These two countries have now brought their levies down to 10%, starting 14 May in an encouraging 24% cut from current levels.
This agreement could be the beginning of a new efforts to resolve both countries’ differences through diplomacy, rather than entering an all-out war.
US Treasury Secretary Scott Bessent said in a press briefing from Geneva that both sides are serious about avoiding any kind of economic decoupling.
“What has occurred with these very high tariffs was the equivalent of an embargo,” he said. “We do want trade. We want more balance in trade.”
This tone shift has provided some immediate relief to markets and analysts believe that the deal removes the risk of the war suddenly restarting.
This has been one of the fears that had been dragging down investor sentiment in both equities and crypto.
Bitcoin, which is the benchmark crypto, has already shown some strength after and even during the trade tensions.
At the time of writing, Bitcoin is trading around $103,000 and may soon reclaim its all-time high of over $109,800, according to data from CoinMarketCap.
With the trade tensions (that caused the February dump in the first place) clearing up, the altcoins, U.S. equities and even the U.S. Dollar Index (DXY) could be set for a catch-up rally.
While the deal itself hasn’t been a major source of optimism, the next major update could be a possible tax relief package from the U.S. government. Treasury Secretary If such a package includes more than just an extension of expiring tax cuts, it could end up increasing the strength of Bitcoin (and the altcoins’) rally.
Even though Bitcoin continues to hold most of the headlines so far, the positive sentiment is spilling into other parts of the market.
With fears of the trade war off the table, investors are looking once again at the undervalued altcoins in the space, as well as some beaten-down tech stocks.
The altcoins themselves are are starting to gain traction, with many popular options registering double digits on the weekly timeframes.
The same is true for U.S. equities, especially those hit hardest by the trade tariffs. Stocks of companies that relied heavily on imports from China (like Apple, Walmart, Intel and Tesla) saw an immediate lift after the tariff announcement.
According to the BBC, the mood in Beijing has now become cautiously optimistic, with many residents pleased by the decision to lower tariffs, even if temporarily.
Despite the enthusiasm, investors should be aware that the agreement is temporary and will last only for the 90-day negotiation window.
Traders continue to monitor U.S. domestic policy developments, and if the expected tax relief package materializes, it could provide the next big push for Bitcoin and risk assets to break through major resistances.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.